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Monarch Aircraft Engineering Collapses

Monarch Aircraft Engineering (MAEL), the MRO division of collapsed British carrier Monarch Airlines, has entered administration resulting in the loss of 408 jobs with immediate effect.

Professional services company KPMG has been appointed to carry out the administration process by MAEL’s board of directors after the embattled maintenance and engineering company ran into financial difficulties.

Of the 408 jobs axed, 250 are based at the company’s base maintenance operations in Luton and Birmingham. The former, home to MAEL’s headquarters since 1967, will shed a large number of staff as part of a further 158 redundancies. 178 staff will remain in their positions, with 83 staying in place temporarily to help wind down operations.

KPMG company said that the MAEL operation had become “unsustainable in its present form” after an October 2018 restructuring of the business saw the company enter into a company voluntary arrangement (CVA) that resulted in a loss of third-party airline customers.

At the time, Luton-headquartered MAEL said that the move was aimed at shedding the historic debt it inherited from its defunct airline affiliate estimated at more than £100 million ($126 million).

“Following the administration of other Monarch entities in 2017, MAEL sought to build its customer base to replace the loss of business from the former airline,” said David Pike, restructuring partner at KPMG on Jan. 4.

“Through the insolvency of the airline however, the company inherited significant debts and claims. Every effort has been made to turn around the business, including launching a CVA which sought to resolve these legacy debts,” Pike continued.

“Unfortunately, following the CVA, a number of customers reduced or sought to terminate their relationship with MAEL, further adversely impacting the business.”

The announcement comes just two months after Greybull Capital became the group’s majority shareholder of the company, which continued operating as a standalone entity after the collapse of its airline parent in October 2017.

Last month, Greybull Capital confirmed plans to sell the MRO having entered talks with several interested parties from the UK and abroad with a view to offloading all or parts of the business.

Earlier this week, MAEL announced the sale of its line maintenance operations in a move that secured 182 jobs in the UK. Line roles at London Gatwick, Birmingham, East Midlands, Newcastle and Glasgow Airport are to be transferred to industry recruitment specialist Morson Group, while line maintenance specialist Storm Aviation will take on the roles at Luton.

Some staff at Gatwick will cross over to Boeing’s aftermarket operation at the UK’s second busiest airport, while roles in Birmingham and Manchester will transfer to Flybe.

Further operations at Manchester and Birmingham Airports, including related employees, were transferred to Flybe.

KPMG says talks remain ongoing over the sale of MAEL’s CAMO business and Luton-based training academy.